Chinese AI bubble crash

[Basman]

I will never financially recover from this.

Quote

While global tech stocks teeter, in China they have already crashed as lofty valuations collapse under worries about AI demand and curbs on Chinese exports.

The meltdown, tanking the mainland STAR50 index (.STAR50), opens new tab of AI and semiconductor leaders by 40% in less than four months and vaporising some $480 billion in market value, is an ill omen for wobbly world markets and a dampener on China's efforts ‌at encouraging its savers into stocks to fund the AI boom.

https://www.reuters.com/world/china/china-ai-bubble-has-already-burst-2026-10-26/

Watch the video attached to the linked article. 

Locking out Chinese AI products globally was probably a big cause in the dip

[Basman]

I can see AI companies trying to switch to providing hacking for the military such that they don't have to be profitable. AI is too expensive to run to be profitable. 

[Joshe]

First half of this year, Anthropic spent 8.95 billion on compute and generated 16.3 billion in revenue from that compute, and efficiency will increase, so it doesn’t seem too expensive to generate profit. What’s expensive is maintaining their position on the frontier. 

[Leo Gura]

20 minutes ago, Joshe said:

Anthropic spent 8.95 billion on compute

They lie! They count some of the compute cost as "marketing".

No way are they profitable.

[Basman]

28 minutes ago, Joshe said:

First half of this year, Anthropic spent 8.95 billion on compute and generated 16.3 billion in revenue from that compute, and efficiency will increase, so it doesn’t seem too expensive to generate profit. What’s expensive is maintaining their position on the frontier. 

Then why did the Chinese market lose 480 billion. Even when cut of from western markets, a profitable technology shouldn't lead to such a bloodbath. That graph is like an executioners axe.

Edited 3 hours ago by Basman

[Joshe]

1 hour ago, Leo Gura said:

They lie! They count some of the compute cost as "marketing".

How do you know they're lying? Don't be an epistemic pervert, lol. 

[Joshe]

1 hour ago, Basman said:

Then why did the Chinese market lose 480 billion. Even when cut of from western markets, a profitable technology shouldn't lead to such a bloodbath. That graph is like an executioners axe.

I'm no business/finance guy, but this seems to make sense: 

If these labs stopped research and training and only focused on extracting profits from what they've already built, they'd be profitable af. The main reason they aren't profitable is due to the arms race. I'm not sure how that arms race ends though. 

[Basman]

2 minutes ago, Joshe said:

If these labs stopped research and training and only focused on extracting profits from what they've already built, they'd be profitable af. The main reason they aren't profitable is due to the arms race. I'm not sure how that arms race ends though. 

Doubt it. Source?

If anything it seems to only become more expensive to run. People are increasingly using AI more, putting a greater load on their systems. 

[Basman]

Democrats want no AI bailouts. They want to prepare for a crash.

Quote

Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, and Congressional Progressive Caucus (CPC) Chair Congressman Greg Casar (D-TX), co-led the introduction of a resolution warning of the economic risks posed by an artificial-intelligence-related asset bubble, opposing a bailout of corporations or their business executives impacted by the collapse of an A.I. bubble, and affirming their support for aggressive federal action to protect workers, retirees, and low-income communities who will be harmed by an economic downturn.

They were joined by Representatives Danny Davis (D-IL), Chris Deluzio (D-PA), Valerie P. Foushee (D-NC), Jesús “Chuy” García (D-IL), Pramila Jayapal (D-WA), Analilia Mejia (D-NJ), Delia Ramirez (D-IL), André Carson (D-IN), Jan Schakowsky (D-IL), Brad Sherman (D-CA), and Rashida Tlaib (D-MI).

“Big tech and Wall Street are taking enormous risks with billions in borrowed money to fuel the A.I. boom, despite growing warning signs of a dangerous bubble. If it all comes crashing down they should not expect taxpayers to rescue them,” said Ranking Member Waters. “We saw what happened in 2008 when reckless Wall Street practices brought our economy to its knees. The banks got bailed out while millions of hardworking Americans lost their jobs, homes, and retirement savings. We cannot let history repeat itself. The American people should never again be forced to foot the bill for billionaires reckless bets.”

“Big Tech billionaires are making increasingly reckless bets on A.I. They got richer off Trump’s deregulation and Republican tax breaks. Now they expect taxpayers to bail them out if those bets go bad. We won’t let them,” said CPC Chair Casar. “A.I. companies that fail should go bankrupt, and executives who commit fraud should be held accountable. Federal help should go to workers and retirees.”

https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=415413